Death, taxes, and health insurance premium increases—three seemingly inevitable realities for employers.
If you have a fully insured health plan, cost increases are almost guaranteed. You pay a fixed monthly premium. Every twelve months they go up. And there is zero opportunity to get any money back when you have a good (low claims) year.
It’s like paying for an all-you-can-eat buffet when you’re barely taking a single bite.
With a fully insured plan, you have certainty, but you do not have any control. What if you could continue enjoying the certainty of fixed-monthly premiums, but actually have the ability to control your costs? What if you could get money back from the insurance carrier when you have a good year?
You can. It is called level funding.
Level funding allows you to “dip your toe” into the waters of self-funding but have the safety of fixed monthly premiums. Controlling your insurance costs does not require a full leap into self-funding. You can take it one step at a time.
How Level Funding Works
Like traditional plans, you’ll pay a consistent monthly premium, making budgeting straightforward and reliable. At the end of the plan year, if your group’s claims are lower than expected, you can receive a refund from the insurance carrier.
This means good health practices and wellness initiatives can directly benefit your bottom line. We’ve seen clients receive checks for thousands of dollars simply by managing their health plan effectively. One client this year will receive a check for $13,000.
These plans also include stop-loss insurance, protecting your business from unexpectedly high claims.
Why Level Funded Plans Make Sense
- Financial Flexibility: Unlike fully insured plans, you’re not simply throwing money into a bottomless pit of increasing premiums.
- Gradual Transition: Level funded plans allow businesses to “test the waters” of self-funding without a full commitment.
- Potential Cost Savings: Proactive health management can lead to direct financial returns.
Controlling insurance costs doesn’t require a dramatic overhaul of your benefits strategy. You can take a measured, strategic approach that provides both financial protection and potential savings.
Now, I know you may have just renewed your health plan, and it’s tempting to want to put it behind you for another year. But now might be the perfect time to explore how a new strategy could benefit your business.